SMM4 News of the 5th of June:
The development of the domestic scrap copper industry is not perfect, the scrap copper in circulation on the market generally does not have a ticket, unless the import scrap copper disassembly factory only has the ticket. Enterprises in order to carry out input tax deduction to purchase value-added tax invoices, resulting in the scrap copper ticket point.
Scrap copper ticket points are generally related to the supply and demand of the copper scrap market with tickets. Under the condition that the supply of scrap copper with tickets is relatively scarce, most of the copper scrap points will rise.
According to SMM, after the tax cut on April 1, the average ticket point of the scrap copper market was reduced from 7.5 per cent to 6.5 per cent, only 1 percentage point lower, but in fact, if you want to maintain the price spread of refined waste before the tax cut, The scrap point should be cut by 1.5 percentage points. After the tax reduction, the price of electrolytic copper decreased by 515 yuan. Due to the relative resistance of the copper scrap point, the decrease of the tax price of scrap copper was lower than that of electrolytic copper, resulting in the narrowing of the price difference of refined copper and the decrease of the consumption advantage of scrap copper.
The refined scrap price difference uses the difference between the electrolytic copper containing tax price and the Guangdong 1 # bright copper containing tax price, and the scrap copper price needs to consider the total cost after including tax (with ticket). Due to the reduction of scrap copper points, excluding tax prices naturally followed the rise. On April 1, 2019, the tax-free price of Guangdong Bright Copper rose by 300 yuan to 45150 yuan. According to the adjusted 6.5 per cent ticket point, the tax price of Guangdong Bright Copper was 45150 / (1-0.065) = 48289 yuan, down 198 yuan from the previous day. On the same day, the price of electrolytic copper decreased by 515 yuan to 49250 yuan compared with the previous day, and the price of waste copper decreased much lower than that of electrolytic copper, resulting in a direct narrowing of the price difference between refined and discarded copper by 317 yuan to 961 yuan. If the price difference of refined scrap remains unchanged, the scrap copper ticket point should be reduced to at least 6%, and the tax value of scrap copper should be 45150 / (1 / 0. 06) = 48032 yuan, which should also be reduced by about 500 yuan. It is precisely because of the drop resistance of scrap copper ticket points that the price spread of refined scrap has narrowed.
On the other hand, the resistance of scrap copper ticket points essentially reflects the strong supply side of the domestic scrap copper market, which is ultimately due to the market concern about the future supply of domestic scrap copper. Downstream hopes to reduce the scrap count to 6%, but in the end it can only be forced to accept it. According to SMM research, the current scrap copper supply market is very easy to cover the goods and cherish the sale mood, therefore, the scrap enterprises obviously feel that the collection of scrap copper is not so smooth, especially when the scrap copper price falls, and when the price rises, The supply remains normal.
As far as the current domestic and external supply situation is concerned, there is still no actual shortage, but the strong willingness of the holder to hold up the price can still cause the scrap price to remain resistant to falling, which will become the resistance that the refined scrap price gap will continue to expand to a high level of more than 1500 yuan. Although the current price difference of refined copper will not stimulate the consumption of refined copper, the crowding effect on the refined copper market will be reduced in the early stage, and scrap copper will also become another support for the recovery of copper consumption.
(SMM Wei Xue)